Vanda Pharmaceuticals Inc. (VNDA) Q3 2025 Earnings Report, Transcript and Summary

Hello, and thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2025 Vanda Pharmaceuticals Inc. earnings conference call. [Operator Instructions] Now I would like to turn the call over to Kevin Moran, Vanda's Chief Financial Officer. Please go ahead.

Thank you, Mark. Good afternoon, and thank you for joining us to discuss Vanda Pharmaceuticals' third quarter 2025 performance. Our third quarter 2025 results were released this afternoon and are available on the SEC's EDGAR system and on our website, www.vandapharma.com. In addition, we are providing live and archived versions of this conference call on our website. Joining me on today's call is Dr. Mihael Polymeropoulos, our President, Chief Executive Officer, and Chairman of the Board; and Tim Williams, our General Counsel. Following my introductory remarks, Mihael will update you on our ongoing activities. I will then comment on our financial results before we open the lines for your questions. Before we proceed, I would like to remind everyone that various statements that we make on this call will be forward-looking statements within the meaning of federal securities laws. Our forward-looking statements are based upon current expectations and assumptions that involve risks, changes in circumstances and uncertainties. These risks are described in the cautionary note regarding forward-looking statements, risk factors, and management's discussion and analysis of financial condition and results of operations sections of our most recent annual report on Form 10-K as updated by our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, and other filings with the SEC, which are available on the SEC's EDGAR system and on our website. We encourage all investors to read these reports and our other filings. The information we provide on this call is provided only as of today, and we undertake no obligation to update or revise publicly any forward-looking statements we may make on this call on account of new information, future events, or otherwise, except as required by law. With that said, I would now like to turn the call over to our CEO, Dr. Mihael Polymeropoulos.

Thank you very much, Kevin, and good afternoon, everyone. Thank you for joining us to discuss Vanda's Third Quarter 2025 Results. This quarter reflects strong commercial execution with total net product sales reaching $56.3 million, up 18% year-over-year, led by a 31% increase in Fanapt sales and 35% growth in prescriptions. HETLIOZ continues to deliver stable performance with $18 million in Q3 sales. We are particularly encouraged by our advancing pipeline, with multiple near-term regulatory milestones. The tradipitant NDA for motion sickness under FDA review with a PDUFA target action date of December 30, 2025; the Bysanti NDA for bipolar I disorder and schizophrenia, also under FDA review with a PDUFA target action date of February 21, 2026; and the anticipated Q4 submission of the imsidolimab BLA for generalized pustular psoriasis. We're also investing strategically in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. We believe that these milestones, combined with our collaborative framework with the FDA will position Vanda for sustained growth and expanded therapeutic impact in 2026 and beyond. On commercial updates. During the third quarter, our Fanapt sales force further expanded their efforts, and we continued our broad awareness campaign. Fanapt revenue increased by 31% compared to the same period in the prior year, driven by the launch of the bipolar I indication. Fanapt is now promoted in the U.S. across all 50 states with a dedicated sales force of approximately 300 representatives. With the expansion of the sales force that was largely completed during the second quarter, we observed a significant increase in activity with the total number of calls growing by more than 20% as compared to the second quarter of 2025 and growing by over 100% compared to Q3 of 2024. Since the bipolar launch, demand is measured by total prescriptions, TRx, new prescriptions, NRx and new-to-brand prescriptions NBRx reached new highs in the third quarter. The commercialization of Fanapt is also supported by a broad speakers program operating across the country that educates prescribers on the profile of Fanapt and how to use it. We're excited by the progress our commercial organization has made as we continue to support the commercialization of Fanapt, aiming for further growth in the coming periods. Total revenue from our 3 commercial branded products Fanapt, HETLIOZ, and PONVORY reached $158.9 million in the first 9 months of 2025. HETLIOZ continues to be the market share leader despite the availability of 3 generic products, a testament to the brand loyalty of our patient customers over the last 11 years. We're continuing to build out and training of our dedicated PONVORY sales force team addressing prescribers for multiple sclerosis. In the last 2 quarters, we saw an increase in underlying patient demand as we intensified our consumer and prescriber awareness programs. During the first 9 months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and our products, Fanapt and PONVORY. We maintain strategic investments in our commercial infrastructure, including increased brand visibility through target sponsorships with the goal of supporting long-term market leadership and future commercial launches. Key regulatory clinical updates, collaborative framework for resolution of disputes with the FDA. On October 1, 2025, we announced a collaborative framework with the U.S. Food and Drug Administration for the resolution of certain disputes regarding HETLIOZ and tradipitant. Pursuant to the agreement, the FDA will conduct an expedited rereview of the partial clinical hold preventing long-term clinical status of tradipitant for the treatment of motion sickness by November 26, 2025. The FDA will continue its review of Vanda's new drug application for this indication with the existing Prescription Drug User Fee Act target action date of December 30, 2025. The FDA will conduct an expedited rereview of Vanda's supplemental new drug application, sNDA, for HETLIOZ for the treatment of jet lag disorder by January 7, 2026, including consideration of alternative or narrowed indications focusing on the sleep-related aspects of jet lag disorder. Bysanti, the NDA for Bysanti for the acute treatment of bipolar I disorder and the treatment of schizophrenia is under review by the FDA with a PDUFA target action date of February 21, 2026. If approved, exclusivity for Bysanti, including pending patent applications could extend in the 2040s. Bysanti is a new chemical entity, which was initially identified as an active metabolite of iloperidone. Vanta discovered that milsaperidone when administered orally, quickly interconverts to iloperidone. In clinical studies, milsaperidone and iloperidone have been shown to be bioequivalent at both low and high doses administered both in single and multiple dose studies. The results of these clinical studies were presented in late May at the 2025 American Society of Clinical Psychopharmacology Annual Meeting in Scottsdale, Arizona. The Bysanti Phase III clinical study for use as once-daily adjunctive treatment for major depressive disorder is ongoing and enrolling patients. Results are expected in 2026. We plan to randomize approximately 500 patients into the clinical study across approximately 50 sites. And as the number of patients randomized increases, we'll be in a better place to estimate the time to completion. Tradipitant, the NDA for tradipitant for motion sickness is under review by the FDA with a PDUFA target action date of December 30, 2025. In the fourth quarter of 2024, Vanda initiated clinical trial study tradipitant in the prevention of vomiting induced by GLP-1 analog, Wegovy, semaglutide. The trial is now complete, and results are expected in the fourth quarter of 2025. Iloperidone long-acting injectable. The Phase III study of the long-acting injectable formulation of iloperidone in the treatment of schizophrenia and relapse prevention is ongoing and enrolling patients. We plan to randomize approximately 400 patients into the clinical study across approximately 60 sites. In general, we have seen similar clinical studies run by other organizations, and they take around 2 years to complete. As the number of patients randomized increases, we'll be in a better place to estimate completion of that study. A clinical study of the long-acting injectable formulation of iloperidone in people with treatment-resistant hypertension is now ongoing and Vanda plans to begin enrolling patients soon. Imsidolimab, a BLA for imsidolimab in the treatment of the rare or orphan disorder, generalized pustular psoriasis is expected to be submitted to the FDA in the fourth quarter of 2025. PONVORY, investigational new drug applications for PONVORY in the treatment of psoriasis and ulcerative colitis were accepted by the FDA in the fourth quarter of 2024. Vanda has initiated the psoriasis study and plans to initiate the study in ulcerative colitis in early 2026. Early-stage program highlights. VQW-765, an alpha-7 nicotinic acetylcholine receptor partial agonist is currently in clinical development for the treatment of acute performance anxiety in social situations. Vanda has initiated the Phase III program and is enrolling patients. We plan to randomize approximately 500 patients into the clinical study across approximately 30 sites. And as the number of patients of randomization increases, again, we'll be able to estimate time to completion. The IND for VCA-894A in the treatment of Charcot-Marie-Tooth disease, axonal type 2S or CMT2S, an inherited peripheral neuropathy for which there is no available treatment, was accepted by the FDA in 2024. Previously, in 2023, VCA-894A was granted orphan drug designation for the same indication. The Phase I clinical study for VCA-894A enrolled the patient who has already received several doses of VCA-894A. With that, I'll turn now to Kevin to discuss our financial results. Kevin?

Thank you, Mihael. I'll begin by summarizing our financial results for the first 9 months of 2025 before turning to discuss the third quarter of 2025. Total revenues for the first 9 months of 2025 were $158.9 million, a 9% increase compared to $145.6 million for the same period in 2024. The increase was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch. Fanapt net product sales were $84.1 million for the first 9 months of 2025, a 24% increase compared to $67.6 million in the same period in 2024. This increase to net product sales relative to the first 9 months of 2024 was attributable to an increase in volume, partially offset by a decrease in price net of deductions. Turning to HETLIOZ. HETLIOZ net product sales were $55 million for the first 9 months of 2025, a 3% decrease compared to $56.6 million in the same period in 2024. The decrease in net product sales relative to the first 9 months of 2024 was attributable to a decrease in volume. Of note, through the third quarter of 2025, HETLIOZ continues to retain the majority of market share despite generic competition for now over 2.5 years. And finally, turning to PONVORY. PONVORY net product sales were $19.8 million for the first 9 months of 2025, a 7% decrease compared to $21.3 million in the same period in 2024. The decrease in net product sales relative to the first 9 months of 2024 was attributable to a decrease in price net of deductions. For the first 9 months of 2025, Vanda recorded a net loss of $79.3 million compared to a net loss of $14 million for the same period in 2024. The net loss for the first 9 months of 2025 included an income tax benefit of $21.4 million as compared to an income tax benefit of $2.4 million for the same period in 2024. Operating expenses for the first 9 months of 2025 were $269.7 million compared to $176 million for the same period in 2024. The $93.7 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY and multiple sclerosis and higher R&D expenses primarily related to the exclusive global license agreement with Anaptys for the development and commercialization of imsidolimab, which was entered into during the first quarter of 2025. During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis, including an expansion of our sales force and the development of prescriber awareness and comprehensive marketing programs. During the first 9 months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and or products, Fanapt and PONVORY. We maintained strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. Vanda's cash, cash equivalents, and marketable securities, referred to as cash, as of September 30, 2025, was $293.8 million, representing a decrease of $80.9 million compared to December 31, 2024, and a decrease of $31.8 million compared to June 30, 2025. The change in cash during the third quarter of 2025 as compared to the second quarter of 2025 was driven by the net loss in the third quarter of 2025 as well as timing of cash received from customers for revenue and related payments of rebates to the payers as well as the timing of cash paid to third parties for services related to operating expenses. Turning now to our quarterly results. Total revenues were $56.3 million for the third quarter of 2025, an 18% increase compared to $47.7 million for the third quarter of 2024 and a 7% increase compared to $52.6 million in the second quarter of 2025. The increase as compared to the third quarter of 2024 was primarily due to growth in Fanapt revenue as a result of the bipolar commercial launch. The increase as compared to the second quarter of 2025 was due to both growth in Fanapt revenue as a result of the bipolar launch and higher HETLIOZ revenue. Let me now break this down by product. Fanapt net product sales were $31.2 million for the third quarter of 2025, a 31% increase compared to $23.9 million in the third quarter of 2024 and a 7% increase compared to $29.3 million in the second quarter of 2025. Fanapt total prescriptions, or TRx, as reported by IQVIA Xponent in the third quarter of 2025 increased by 35% compared to the third quarter of 2024 and 11% compared to the second quarter of 2025. Fanapt new patient starts in the third quarter of 2025 as reflected by new-to-brand prescriptions, or NBRx, increased by 147% compared to the third quarter of 2024 and by 14% compared to the second quarter of 2025. The increase in Fanapt revenue between the third quarter of 2025 and the third quarter of 2024 was primarily attributable to an increase in volume, partially offset by a decrease in price net of deductions. The increase in Fanapt revenue between the third quarter of 2025 and the second quarter of 2025 was attributable to an increase in volume, partially offset by a decrease in price net of deductions. These increases in volume were primarily driven by increased total prescription demand as well as increased wholesaler inventory levels. Historically, Fanapt's inventory at wholesalers has ranged between 3 and 4 weeks on hand as calculated based off trailing demand. As of the end of the third quarter of 2025, Fanapt inventory at wholesalers was just above 4 weeks on hand, which was consistent with the level of inventory weeks on hand as of the fourth quarter of 2024, but slightly above the historic range. Turning to HETLIOZ. HETLIOZ net product sales were $18 million for the third quarter of 2025, a 1% increase compared to $17.9 million in the third quarter of 2024 and an 11% increase compared to $16.2 million in the second quarter of 2025. The increase in net product sales relative to the third quarter of 2024 was primarily attributable to an increase in volumes sold, almost entirely offset by a decrease in price net of deductions. The increase in net product sales relative to the second quarter of 2025 was primarily attributable to an increase in price net of deductions, partially offset by a decrease in volume. HETLIOZ net product sales continue to be impacted by changes in inventory stocking at specialty pharmacy customers from period to period. Going forward, HETLIOZ net product sales may reflect lower unit sales as a result of reduction of the elevated inventory levels at specialty pharmacy customers or may be variable depending on when specialty pharmacy customers need to purchase again. Further, HETLIOZ net product sales may decline in future periods, potentially significantly, related to continued generic competition in the U.S. Additionally, the company constrained HETLIOZ net product sales for the first 9 months of 2025 and for the years ended December 31, 2024, and 2023 to an amount not probable of significant revenue reversal. As a result, HETLIOZ net product sales could experience variability in future periods as the remaining uncertainties associated with variable consideration related to inventory stocking by specialty pharmacy customers are resolved. And finally, turning to PONVORY. PONVORY net product sales were $7 million for the third quarter of 2025, an increase of 20% compared to $5.9 million in the third quarter of 2024 and a decrease of 1% compared to $7.1 million in the second quarter of 2025. The increase in net product sales as compared to the third quarter of 2024 was attributable to an increase in volume. The decrease in net product sales as compared to the second quarter of 2025 was attributable to a decrease in volume sold, almost entirely offset by an increase in price net of deductions. During the second quarter of 2025, there was an increase in net product sales as compared to the first quarter of 2025, which was attributable to an increase in volume sold, a portion of which was driven by increased underlying patient demand, albeit modest, but was also impacted by increased specialty pharmacy and specialty distributor inventory on hand levels above the historic range. The inventory on hand levels remained elevated as of the end of the third quarter of 2025, but had decreased closer to the historic range. As a reminder, we completed the acquisition of the U.S. and Canadian rights to PONVORY in December 2023 and initiated the commercial launch of PONVORY in the third quarter of 2024. As such, this represents the fourth full quarter of PONVORY revenue recognition since the initiation of commercial launch activities and significant progress in diversifying our product mix with innovative and value-generating products. Of note, an amount of variable consideration related to PONVORY net product sales is subject to dispute, of which approximately $3 million was recognized for the 3 months ended December 31, 2024. For the third quarter of 2025, Vanda reported a net loss of $22.6 million compared to a net loss of $5.3 million for the third quarter of 2024. From an income tax perspective, the net loss for the third quarter of 2025 included an income tax benefit of $5.8 million as compared to an income tax benefit of $0.9 million for the third quarter of 2024. Of note, on the tax side, the company assesses the need for a valuation allowance against its deferred tax assets each quarter through the review of all available positive and negative evidence. The company generated a pretax loss for the quarter ended September 30, 2025. If the company continues to generate pretax losses and/or if the company's projections indicate pretax losses in future periods or if there are meaningful changes to our business operations, the conclusion about the appropriateness of the valuation allowance could change in the future. An increase in the valuation allowance would result in a noncash income tax expense during the period of change. The current deferred tax assets reflected in the balance sheet as of September 30, 2025, amount to $103.1 million. If it is determined that the company needs a valuation allowance against its deferred tax assets in a future period, the noncash income tax expense recorded during the period of change could be equal to the significant majority of the $103.1 million balance. Operating expenses in the third quarter of 2025 were $87.5 million compared to $58.7 million in the third quarter of 2024. The $28.9 million increase was primarily driven by higher SG&A expenses related to spending on Vanda's commercial products as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis and higher R&D expenses. During 2024 and 2025, we commenced a host of activities as a result of the commercial launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis, including expansions of our sales force and the development of prescriber awareness and comprehensive marketing programs. During the first 9 months of 2025, our direct-to-consumer campaign launched in the first quarter continued to drive meaningful gains in brand awareness for the company and our products, Fanapt and PONVORY. We maintained strategic investments in our commercial infrastructure, including increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. With regards to the launches of Fanapt in bipolar disorder and PONVORY in multiple sclerosis, as I mentioned, the launches were initiated in 2024, and we expect to continue the build-out of our commercial infrastructure with the impact of these commercial efforts expected to contribute to revenue growth in 2025 and beyond. We have already seen significant growth in our commercial activities. Several lead indicators suggest a strong initial and continued market response to our commercial launch of Fanapt for bipolar disorder, including new patient starts as reflected by NBRx, increasing by 147% in the third quarter of 2025 as compared to the third quarter of 2024. In the third quarter of 2025 as compared to the third quarter of 2024, total prescriptions or TRx increased by approximately 35%. Of particular note, Fanapt was one of the fastest-growing atypical antipsychotics in the market through the first 9 months of 2025 based on several prescription metrics. Our Fanapt sales force size continues to expand. As of the end of the third quarter of 2024, our sales force numbered approximately 150 representatives. And currently, we have approximately 300 representatives following our additional expansion during the second quarter of 2025. These expansions have allowed us to significantly increase our reach and frequency with prescribers. To that end, face-to-face calls in the third quarter of 2025 were more than 20% higher than face-to-face calls in the second quarter of 2025. And face-to-face calls in the third quarter of 2025 were more than twice the face-to-face calls in the third quarter of 2024. In addition to our Fanapt sales force, we have established a specialty sales force to market PONVORY to neurology prescribers around the country. We have grown this sales force to approximately 50 representatives in the third quarter of 2025. Of particular note, PONVORY underlying patient demand increased, albeit modestly, for the second consecutive quarter. Before turning to our financial guidance, I would like to remind folks that with Fanapt, HETLIOZ, and PONVORY already commercially available, and with HETLIOZ for jet lag currently being rereviewed by the FDA and the tradipitant NDA for motion sickness under review by the FDA, the milsaperidone or hopefully to be known under the brand name Bysanti NDA for bipolar I disorder and schizophrenia under review by the FDA and a biologics license application or BLA for imsidolimab expected to be submitted later this year, Vanda could have 6 products commercially available in 2026. Turning now to our financial guidance. Vanda is providing an update to its prior 2025 guidance. Vanda expects to achieve the following financial objectives in 2025. Total revenues from Fanapt, HETLIOZ, and PONVORY of between $210 million and $230 million. This compares to prior guidance of between $210 million and $250 million, year-end 2025 cash of between $260 million and $290 million. This compares to prior guidance of between $280 million and $320 million. This revised revenue range narrowed to the lower end of the original revenue range reflects strong Fanapt revenue growth in 2025 that is expected to grow on a quarterly basis and potentially accelerate with the full impact of the expanded sales force. The revised and lowered year-end 2025 cash guidance reflects the impact of the significant investments that Vanda is currently making to facilitate future revenue growth, both in the form of R&D investments and strategic investments in commercial infrastructure, including Vanda's direct-to-consumer campaign launched in the first quarter, which continued to drive meaningful gains in brand awareness for the company and its products as well as increased brand visibility through targeted sponsorships with the goal of supporting long-term market leadership and future commercial launches. With that, I'll now turn the call back to Mihael.

Thank you very much, Kevin. At this point, we will be happy to answer your questions.

[Operator Instructions] And your first question comes from the line of Raghuram Selvaraju with H.C. Wainwright.

I was wondering if you could first and foremost comment on some hypothetical scenarios with respect to the interactions with the FDA. And if these ultimately result in approval decisions, particularly as this pertains to tradipitant, when those approvals might occur? Should we expect potential -- the possibility of tradipitant approval sometime in the first half of 2026, if ultimately the interactions with the FDA proceed positively?

Yes. Thank you very much, Ram. First of all, I would say and I reiterate that we're very pleased with the new collaborative framework that has been established with the FDA. And just as a background, that comes after the significant development of a win in the appellate court by Vanda in August of this year, where we challenged the decision of rejection of HETLIOZ for jet lag without a hearing. And the court canceled the rejection by the FDA and sent it back to the FDA for further proceedings. This was one of the precipitating factors alongside with the new management at the FDA, where we sat down with them to develop a path forward. And we're very quickly able to agree on several initial steps. And the first one, as we mentioned, is the rereview of the HETLIOZ sNDA for jet lag and a promise to be completed by early January of 2026. On your question on tradipitant, tradipitant review is ongoing. And we expect the decision by December 30, 2026. The reason we are optimistic is that so far there have been no issues raised with the efficacy of the drug. And therefore, we are encouraged that this could lead to approval. One area that's very relevant with the collaborative framework to tradipitant is the reconsideration of the partial clinical hold. And to give context, this is a clinical hold on a longer-term motion sickness study. The initial study lasted 12 months and people could take up to 90 doses. We asked for an extension of that study with an amendment to further study tradipitant for an additional 12 months and an additional 90 dose within that period. And that is when, about a year ago or so, the FDA objected to that additional extension, suggesting that an additional long-term 6-month dog toxicity study is needed. And of course, we have contested that. But now the FDA was willing to reconsider that decision, and that is now with CDER with a promise to issue a decision by end of November. So with that, if cleared, alongside what is almost agreed upon, I would say, efficacy demonstrated for tradipitant motion sickness, we'll be optimistic for an approval by end of this year.

Secondly, I wanted to ask about PONVORY performance and what you look for in terms of future quarterly growth rate pickup in revenue from this product, particularly given the current investment that you are making in sales and marketing behind the product at this point. Maybe you can give us a sense of what kind of quarterly growth you would expect in terms of net sales for PONVORI over the course of the next 2, 3 quarters? That would be helpful.

Yes. I will let Kevin comment on the future growth. But I would say, we're still in the early phase. The sales force that was built to about 50 people is actually a very recent event, in the last quarter or so, fully staffed. The speaker programs are just starting. And PONVORY has been a smaller piece of our direct-to-consumer campaign so far. That being said, these are significant investments, and we're investing towards future growth. But I will pass it on to Kevin for his comment.

Thanks, Mihael. Thanks, Ram, for the question. Just as a bit of reminder on the background here. So we acquired the product from J&J at the end of 2023. And at that point, J&J had ceased support for the product a little over a year prior to that. We completed the transition of the PONVORY product from J&J right at the end of the third quarter of last year, so about a year ago. And what we saw during that period from when J&J ceased commercial support through the first quarter of this year was a decline in the underlying patient demand. And that would be expected given that there wasn't any active support in the market from essentially the end of 2022 through roughly the end of the third quarter of last year. What we've seen in the last 2 quarters that's very encouraging to us is we've seen increases in the underlying patient demand, both from the first quarter to the second quarter and then again from the second quarter to the third quarter. There's been some buying patterns from the SPs and SDs that have made the quarterly revenue a little bit up or a little bit down depending on the timing of their purchases, but the underlying demand during those 2 periods is up. And so for us, that's an encouraging sign that our commercial strategy and support for the product is beginning to take hold. And as Mihael had mentioned, with the recent investment in the commercial sales force that, as I mentioned in my script, was completed during the third quarter of this year, we're hopeful that we'll begin to see that trend continue and potentially increase as we exit this year and head into next year, where we not yet have provided guidance beyond 2025.

And then just very quickly, 2 other time line aspects. I was wondering if you could, A, comment on the perspectives for the imsidolimab BLA to receive priority review once it has been submitted to the FDA? And secondly, if you could give us any sense of whether you have revised or more specific timing guidance to provide on the MDD study?

So Ram, I think your 2 questions were on the imsidolimab priority review.

Yes. I will address that. But go ahead, Kevin.

And then on the timing for the MDD study, Ram, so maybe I'll take that one second, is what we communicated at this point is that we expect results by the end of next year. But given that we've enrolled patients over the last few quarters, we'd like to see a bit more of kind of a run rate before we provide an exact timing on what period we expect to see the results in. But at this point, we've communicated results by the end of next year and hope to be able to share more as we get a few more quarters under our belt.

Yes, that's right. And sites are coming up in the U.S., but also very recently, we got approval for initiation for a number of sites in Europe. So hopefully, that will accelerate recruitment. Regarding imsidolimab, of course, this is a rare or orphan disorder, and we expect a 6-month priority review.

And your next question comes from the line of Olivia Brayer with Cantor.

Can you talk a little bit about the guidance change this quarter? I mean at the midpoint, it still implies growth for 4Q, but at the lower end of the range, it wouldn't necessarily. So maybe just thoughts around the pushes and pulls of that guidance change and what you're seeing so far into October that helped inform today's update? And then I've got a couple of questions on Bysanti.

Yes, absolutely. Thanks, Olivia, for the question. So a couple of pieces there. And one thing that I commented on in my script was that underlying the guidance for this year is strong Fanapt revenue growth for the year, right, which is, I think, an underpinning of our guidance. But the other thing that's a variable in that consideration is the HETLIOZ revenue, which we've commented on, can be very variable from quarter-to-quarter depending on the timing of our customers' purchases. So what we see there is that the actual underlying demand for HETLIOZ is pretty consistent. As we've mentioned, we maintain the majority of the market share still at this point, even 2.5 years post generic launch. But the actual buying patterns, which translate to the revenue patterns for HETLIOZ can vary from quarter-to-quarter. And if we saw customers not need to buy as much in the fourth quarter, that could put us on the lower end of the revenue range. So that's kind of the dynamic there. But for Fanapt, what we've seen in the last 2 quarters is both revenue meaningful growth in both quarters and the underlying demand, which we're highly focused on, right, from a quarter-to-quarter perspective, growing sequentially very strong. So we saw 14% growth Q1 to Q2 and 11% growth Q2 to Q3 from a script perspective. And so we expect to see that continue to grow in Q4 to increase relative to Q3 would be our expectation underlying that guidance.

Super helpful, Kevin. And then is there anything you guys can tell us at this point around just the engagement that you're having with the FDA for your ongoing Bysanti review? Have they indicated wanting to see any additional information as part of your submission package? And anything you can tell us on when you might enter into label discussions for that asset? And then just kind of as a -- I know there's a couple of questions in there, but as a follow-up on the commercial side, as you look out to your PDUFA next year, what's the commercial strategy for actually convincing patients to switch from Fanapt over to this newer product? Is there a commercial hook or an incentive that would actually incentivize patients to make the switch before a generic version of Fanapt becomes available?

Maybe I'll start off with the regulatory update, and I'll let Kevin comment on the commercial strategy. The -- I think we have given an update that so far, the interactions with the division have been quite positive in that there have been no issues raised on the efficacy and the safety of the drug. So that is progressing well. Now in terms of label negotiations, we don't comment if they have started or about to start. But typically, those will precede the PDUFA date by a couple of months or so.

Yes. And then, Olivia, on the commercial strategy, we haven't shared, I would say, some key elements of our commercial strategy for Bysanti and the potential transition for Fanapt to Bysanti. But what I would tell you is, as we've talked about in the past, the atypical antipsychotic class is both a highly promotionally sensitive class and also a high switch class. So products that are actively promoted out there, as you know, will do significantly better than products that are not actively promoted. And as part of that, with it being a high switch class, if there are certain commercial tools that are available to prescribers, namely starter packs or titration packs in our case, or commercial co-pay programs, if those programs are available to patients that are starting, they'd be more likely to start on a product that offers those programs versus a product that doesn't. So I think both the nature of the class being highly promotionally sensitive and the potential support that could be available for patients, I think will lead to meaningful success on Bysanti when we decide to pull that trigger.

And I will add, Olivia, that the longer commercial plan is the addition of indications starting with the adjunct treatment of major depression with actually a key differentiator of how Fanapt has been used so far with a once-a-day dosing, increasing the convenience and hopefully compliance.

And your next question comes from the line of Andrew Tsai with Jefferies.

On the quarter. This is [ Matt Marcus ] on for Andrew Tsai. First off, for tradipitant in motion sickness, it could be approved on December 30, and then HETLIOZ jet lag could be approved January 7. What would your marketing strategy be for these? And what would the shape of the launch curve look like for these drugs?

Yes. Thank you. We're actually very excited for both of these potential approvals because they share in common the consumer-centric focus, both in HETLIOZ in jet lag and tradipitant for motion sickness. We're developing a quite elaborate strategy that will become very consumer-centric, focusing on concierge service for supplying the drug to both of them. And our recent experiences with direct-to-consumer campaigns, but also the elevation of brand awareness of the company are going to be very important and have been strategically designed to be in place in advance of those launches. We expect if both of them approved in that time frame you mentioned, that we should be able to be in the market by the first half of 2026. And in subsequent interactions, we can discuss a little more about the latest on the total addressable market for both indications. But I will highlight, it is significant and expanded, both of increased travel, but also the unmet need in motion sickness that has not seen a treatment -- a new treatment in the last 45 years.

And then for your GLP vomiting study, can you describe that study? Like what does the positive efficacy data look like? And what would be the next steps for the program? And then similarly, for Bysanti, should have like Phase III data in 2026. What kind of measures to efficacy separation do you hope to achieve in that study?

Yes. So I will start with the last question. On MDD, like any other study, there is not a threshold of response. We are looking for a positive primary endpoint on the typical clinical scales that will be used. And of course, subsequently, people are doing a responder analysis, trying to identify a portion of patients responding to a certain effect. But there is no threshold that is required. But of course, the study is powered to detect a significant minimal threshold of efficacy. Your other question was on the use of tradipitant in preventing the GI, specifically vomiting side effects of Wegovy, semaglutide. And we know that GLP-1 analogs have to be titrated slowly because of the very frequent nausea and vomiting side effects, which actually limits the efficacy at least for a certain period of time. And for a number of patients, around 15% or so, may actually drop out of treatment and obviously the benefit of GLP-1 analogs. So this is a well understood and very significant therapeutic issue. The study we have designed, administers tradipitant for a few days prior to initiating a Wegovy injection, which is administered at a much higher dose than the recommended titration dose. Titration dose begins at 0.25 milligrams and escalates in 4-week increments. The dose we're using in the study is 1 milligram. And patients are randomized to receive either Wegovy or placebo. And what we do is we follow these people and measure the efficacy with the number of vomiting episodes and other secondary endpoints like nausea, duration of nausea, et cetera. And as I said, this study has completed now. The sites and data are being monitored and data clean, and we hope soon to be able to analyze the top line results.

That concludes our question-and-answer session. I will now turn the call back over to the management for closing remarks.

Thank you very much for joining this call. We'll see you at a later time.

This concludes today's call. You may now disconnect.